maandag 15 juli 2013

Doing business in Germany/ Set up of an GmbH



Doing business in Germany
Set up of an GmbH

The GmbH is a limited liability company and one of the most used legal entities in Germany.
Below we will point out the main issues which are necessary for the set up of a GmbH. The German Ministry of Economy and Technology offers an English language online service for foreigners wishing to start a business in Germany (www.existenzgruender.de). This step-by-step portal lists start-up procedures, business planning strategies and management techniques to ensure the company is successful. State aid can also be applied for, although previous employment in the country is required for at least a year to be eligible for assistance in general.
TIP: Prepare your step into Germany well, use specialists to overcome traps to make sure you will be successful in setting up your business on the German market.
                                                                                    


The minimum capital of a GmbH is 25.000,00 Euro. At least 12.500,00 EUR has to be paid in when the company is founded and before the application for the entry in the commercial registry is filed. If the GmbH has only one partner who shall also act as director he will have to provide a security for the outstanding residual amount.
The company agreement is subject to a notarial deed. The notary manages for the partners also the application for the registration of the company in the Commercial Register. The notarial establishment of any company charter also requires the involvement of a sworn translator unless the founders waive this requirement. The waiver is only accepted by the civil notary if he is assured that the founders gain proper knowledge of the company charter in another way.
Costs for the establishment of a GmbH depend on the nominal capital. For a GmbH holding the minimum capital of 25.000 Euro; the costs are:
- 168 Euro; for the notarial drafts of the company charter,
- 168 Euro; for the notarial recording of the first general meeting (actually not needed),
- 42 Euro; for the entry in the register, publication in the gazette
- 100 Euro; publication in the gazette


The start of a business must be reported to the local office of trade and industry. They will inform the tax office immediately who will send a questionnaire to the owner of the business in order to acquire data which are necessary for taxation purposes. The questions refer from general information such as the type of business, its address, banking data and so on to data which are particularly important for the taxation, e.g. if the business is liable to VAT due to its size or whether the tax office will have to assess advance payments on the income, corporation and business taxes. If cross border business is planned the business owner can apply for an international VAT ID. The questionnaire has to be filled in and sent back to the tax office within a month.
A GmbH has to maintain an adequate and orderly accounting in the shape of a double entry bookkeeping irrespective of their size. They will also have to produce annual statements consisting at least of a balance sheet, the explanatory notes to the accounts and a profit-and-loss report within three months as of the beginning of a new accounting year. For small GmbHs this period is extended to six months. The annual statements have to be published by furnishing them to the Commercial Register.

Managing directors (Geschäftsführer) act as statutory representatives of the GmbH. As such, they are exposed to various liabilities in particular if the business of the GmbH is not thriving. In general, any damage caused through deliberate acts contrary to public policy can incur a personal liability of the Managing director  e.g. by the placement of orders at a time when the GmbH is already over indebted and is not able to pay the rendered work later on. In connection with the over indebtedness of a GmbH the criminal delay by the managing director in filing a bankruptcy petition is practically very relevant. Any financial obligation incurred after illiquidity or indebtedness may cause a personal liability of the Managing director against the contractors of the GmbH.
The German government offers a variety of tax advantages as well as funding supports to starting businesses. It is eminent to be supported by specialists who can assist in using the advantages. The GmbH is liable to corporate income tax including the solidarity surcharge and to business income tax. The corporation tax rate at present is 15 %. Losses incurred by the GmbH in one fiscal year can be carried further or backwards which may reduce the profits that serve as a basis for the assessment of the corporation taxes in earlier or later tax assessment periods.

In addition to the corporation tax the profits of the GmbH are subject to the municipal business tax at a rate that is made of result of the municipal rate as fixed by the municipality multiplied with 3,5 %. As the tax rates differ considerably from town to town the business tax constitutes a decision factor on the location of the company.
                                                                                                  


Dividends paid out to the shareholders as well as profits arising of the sale of share are liable to capital gains taxes at a rate of 25 % plus solidarity surcharge and - if applicable - church tax. Upon a respective application, the tax rate can be reduced for taxpayers with low income. Partners holding at least 25 % of the nominal capital or partners who hold at least 1 % and work for the GmbH can also opt for taxation pursuant a partial income procedure. For corporations holding interests in a GmbH only 5 % of the dividends and sales profits received are subject to taxation. Foreign shareholders/ partners have to observe the taxation rules as stipulated in the double taxation agreements between Germany and their respective home country. 

Always have your fiscal lawyer look into the matter before you set up a legal entity in another country as it will have a fiscal impact in your home country.

A foreign employer will have to observe that labour contracts have to be concluded in writing. This also applies to notices of termination of a work contract. Employees benefit from several rights which cannot be deviated from by mutual agreement to their disadvantage, e.g. in regard to the vacation which are stipulated in the Federal Vacation Act. Employers are required to pay half of their workers' health, unemployment, pension and old-age care insurance. They also have to pay for the statutory accident insurance. 


Source: Henning M. Haarhaus, Berlin


dinsdag 2 juli 2013

10 Reasons why companies invest in Germany



10 Reasons why companies invest in Germany
                                                                                                   
 

Germany is one of the world's leading industrial nations. It offers a large market, a central location in Europe and a high level of innovation. Do you need more reasons to invest in Germany?


1. Large Market
With 82 million inhabitants, Germany is the European Union's most populous country and therefore also the largest market within the EU. With a gross domestic product of more than 2.2 trillion Euro, Germany is the largest economy in Europe and the third strongest economy in the world. 

2. Central Location
Germany's central location in Europe make it a hub for goods and services. Germany is especially benefiting from EU enlargement. As a result, it is the only country among the seven most important industrialized nations to increase its share of world trade since 1995. 

3. Open Market
Germany is an open market and warmly welcomes foreign investors. That is demonstrated by the 22,000 foreign enterprises that have established businesses in Germany and now employ more than 2.7 million people. The German market is open to entrepreneurial investment in practically all areas. There are no longer any state-controlled industries. Germany is receiving increasing attention from private equity firms and hedge funds due to its highly attractive companies legislaton and favourable investment conditions.

4. International Location
More than 7 million foreigners live in Germany. Several metropolitan regions have prominent foreign communities with their own schools, churches, shops and restaurants. Approximately 70% of German blue- and white-collar workers can speak more than one language. 

5. Qualified Personnel
Germany offers an exceptionally well-qualified, motivated and conscientious workforce. German employees' high standard of knowledge and skills is internationally recognized. The demand for professionals is met by 383 institutions of higher education. Another pillar of the German training system is the "dual system", which combines workplace training and school instruction and produces an acknowledged high standard of training closely oriented towards the needs of industry.
6. High Level of Innovation
Statistically, Germany has 277 international patents per one million inhabitants - more than anywhere else in the world. The close cooperation between industry and world-famous research


institutions like the Max Planck and Fraunhofer Institutes, swiftly transforms new ideas into products for the world market.
7. Highly Developed Infrastructure
Germany has a closely knit network of roads, railways and international airports. This guarantees swift connections. The airport in Frankfurt is an international hub. The Port of Hamburg is one of largest container transshipment centers in Europe. Communications infrastructure is exceptionally well-developed throughout the country. 

8. Legal Security
Germany is a modern constitutional state with transparent and reasonable laws. The advantages are internationally recognized. The German legal system has served as a model for legal systems in many other countries. International studies demonstrate that German legal security is highly regarded by investors. Among all countries, Germany ranks fourth in terms of legal security. 

9. Strong small and medium sized companies
The German economy is characterized by privately owned small and medium-sized firms, the Mittelstand. 85% of all businesses are small or medium-sized. This makes German industry very flexible, multifaceted and competitive. Many of these highly specialized firms are world market leaders in their field, so-called "hidden champions". 

10. World Famous Trademark
Products with the "Made in Germany" seal stand for the highest quality worldwide. This has played no small part in maintaining Germany's position as world champion exporter for many years. The automobile, mechanical engineering, electrical engineering and chemical sectors are particularly strong. Industries of the future such as environmentally friendly energy production and nanotechnology, in which the number of patent applications is doubling every two years, are steadily gaining in importance. Foreign investors can profit from the "Made in Germany" seal of quality.

Interested in bringing your business to the German market call Kennispunt at +31624866797 or Skype me at: marco.van.houttum



More information can be obtained on the company website: www.kennispunt.eu English pages can be found at: http://www.kennispunt.eu/nl/internationaal_engels



                                                                          
Kennispunt your starting point for successful business in Germany

Kennispunt your starting point for successful business in Germany!



 



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